2013 (8) TMI 986 - AT - Income Tax

Treatment of income from sale of shares - Held that - As income from sale of shares has been consistently accepted as short term capital gain in preceding and succeeding years, we see no reason for observing departure for the current year

Summary

Issues: Treatment of income from sale of shares as short term capital gain or business income.

Analysis:

The judgment deals with an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) regarding the treatment of income from the sale of shares for the assessment year 2007-2008. The primary issue revolves around whether the income of Rs. 41,25,225 from the sale of shares should be considered as short term capital gain or business income.

Upon reviewing the facts, it was found that the assessee had earned income from the sale of shares amounting to Rs. 41.25 lakh, treated as short term capital gain. However, the Assessing Officer contended that this amount should be considered as business income instead of short term capital gain. The Commissioner of Income-tax (Appeals) disagreed with the Assessing Officer's assessment.

The Tribunal considered the submissions and the relevant material on record. It noted that in previous years, the profit on short term capital assets was consistently treated as short term capital gain. The Tribunal also observed that in the immediately succeeding assessment year, the income from the sale of shares under similar circumstances was accepted as short term capital gain. The Tribunal referred to a precedent set by the Hon'ble jurisdictional High Court emphasizing the principle of consistency in such matters.

Citing the case law, the Tribunal upheld the impugned order, stating that there should be uniformity and consistency in treatment when the facts and circumstances are identical. As the income from the sale of shares had been consistently accepted as short term capital gain in preceding and succeeding years, the Tribunal found no reason to deviate from this approach for the current year. Therefore, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) regarding the treatment of the income from the sale of shares as short term capital gain.

In conclusion, the Tribunal pronounced the order on August 23, 2013, affirming the treatment of the income from the sale of shares as short term capital gain based on the principle of consistency and precedent established by the Hon'ble jurisdictional High Court.